Specialised Solutions for TCSPS’ AML/CF Compliance Management

We offer a comprehensive set of anti-money laundering (AML), counter-terrorist financing (CFT), and fraud prevention solutions for company formation providers’ anti-money laundering compliance that are tailored to applicable AML/CTF (aka CTF) laws, regulations, AML/CTF supervisors' guidance for trusts and company formation providers (TCSPs), sector-specific red flags and indicators, to help your business meet applicable obligations that cover TCSPs’ money laundering and terrorist financing risk mitigation, TCSPs’ fraud prevention, the detection and handling of other types of financial crime.

We have designed our AML solutions to help you navigate the complexities of TCSPs’ AML requirements in a commercially oriented and goal-focused manner, providing effective AML/CTF support for all aspects of TCSPs’ AML compliance, including but not limited to:

 

• Business Profile and Strategic Factors:
• Your commercial objectives
• Your products
• The size and structure of your business
• Your available AML/CTF compliance technology and resourcing
• Your risk appetite for AML/CTF-related risks
• Your governance framework and reporting lines
• Your client demographics
•  Your countries of operation

 

 

• Applicable Regulatory and Fraud Prevention Obligations:
• AML/CTF regulations for company formation providers
• Any TCSP fraud prevention obligations or expectations your business may be subject to
• Any related compliance obligations, including, but not limited to, company formation providers’ obligations under:

• Privacy laws
• Financial market laws
• Fair trading laws
• Financial licensing requirements
• Other relevant regulatory frameworks

 

• Operational AML/CTF Compliance Requirements:

• Money laundering and terrorist financing (ML/TF) risk assessment
• AML risk management
• Customer due diligence (CDD) and Know Your Customer (KYC) obligations for company formation providers
• Enhanced customer due diligence
• Ongoing customer due diligence and transaction monitoring
• PEP identification and sanctions compliance
• Staff vetting and AML/CTF training
• Ad-hoc and periodic reporting
• Other obligations relating to company formation anti-money laundering, counter-terrorist financing and sanctions compliance, as well as financial crimes prevention

 

 

What Jurisdictions Do Our TCSPs’ AML Solutions Cover?

Focusing on money laundering (ML), terrorism financing (TF) mitigation, and fraud prevention, our TCSPS’ AML solutions cover businesses who are deemed to be AML/CTF designated service providers (aka “reporting entities”) in the following jurisdictions:

Offshore Tax Havens

• TCSPS’ AML solutions in the British Virgin Islands (BVI): Company Formation AML compliance in the BVI is governed by the BVI Anti-Money Laundering Regulations and the Proceeds of Criminal Conduct Act, with the BVI Financial Services Commission overseeing AML/CFT compliance.
• TCSPS’ AML solutions in the Cayman Islands: Company Formation AML requirements in the Cayman Islands fall under the Proceeds of Crime Law and Anti-Money Laundering Regulations, supervised by the Cayman Islands Monetary Authority (CIMA).
• TCSPS’ AML solutions in Bermuda: Company Formation AML regulations in Bermuda are outlined by the Proceeds of Crime Act and Anti-Money Laundering Regulations, with the Bermuda Monetary Authority (BMA) overseeing compliance.
• TCSPS’ AML solutions in Other Offshore Jurisdictions: We offer a range of TCSPS’ AML solutions for businesses operating out of other offshore tax havens.

Onshore Jurisdictions

• TCSPS’ AML Solutions in Australia: Company Formation AML obligations in Australia are governed by the Anti-Money Laundering and Counter-Terrorism Financing Act 2006, with AUSTRAC responsible for enforcement.
• TCSPS’ AML Solutions in New Zealand: Company Formation AML laws in New Zealand are outlined by the Anti-Money Laundering and Countering Financing of Terrorism Act 2009, with the Department of Internal Affairs (DIA) supervising compliance.
• TCSPS’ AML Solutions in the United Kingdom: Company Formation AML compliance in the UK is regulated by the Money Laundering, Terrorist Financing and Transfer of Funds (Information on the Payer) Regulations 2017, last amended in 2020 with oversight by HM Revenue and Customs (HMRC).
• TCSPS’ AML Solutions in the United States: Company Formation AML practices in the United States are guided by state-level regulations, as there is no direct federal oversight under the Bank Secrecy Act.
• TCSPS’ AML Solutions in the European Union: Company Formation AML obligations in the EU are enforced under the Sixth Anti-Money Laundering Directive (AMLD6), with oversight by National Competent Authorities in each member state.
• TCSPS’ AML Solutions in Singapore: Company Formation AML regulations in Singapore are enforced by the Monetary Authority of Singapore (MAS).

 

 

 

TCSPS’ AML Advisory and Support

Our AML/CFT advisory services for company formation providers include, but are not limited to, the following:

• Detailed AML/CTF compliance advice: Tailored to the TCSPs’ AML requirements for different processes, including but not limited to customer due diligence (CDD), transaction risk scoring, transaction monitoring, customer onboarding and know-your-customer (KYC) analysis, and other AML processes. Also tailored to the specific money laundering and terrorist financing (ML/TF) risks involved in these processes, helping you with effective ML/TF risk management.
• TCSP fraud risk management advice: Advising on measures, controls, and processes for detecting, preventing, and responding to different types of fraud, scams, and other types of financial crime relevant to company formation providers. Also, tailored to TCSP fraud environment, risk management practices, and stakeholders' expectations and obligations (banks, regulators, insurers, shareholders, etc.).
• Banking relationships advice: Advising TCSPS providers on AML/CTF issues related to maintaining and expanding their banking relationships, complying with banks' AML/CTF risk appetite standards, recall procedures and expectations, and other operational requirements.
• Operational AML/CTF advice: Advising support and KYC teams on day-to-day onboarding, support queue management processes, allocating AML/CFT resources effectively, and making operational improvements to enhance overall customer experience and AML compliance efficiency.
• Specific matter advice (difficult clients, high ML/TF risk matters, customer due diligence for high-net-worth clients, complex transactions and more): Advising on handling specific AML/CTF issues related to clients and complex and unusual transactions, including assessing the adequacy of Sources of Wealth (SOW) or Source of Funds (SOF) information and documentation for specific enhanced due diligence (EDD) cases.
• Peer benchmarking and best practices: Helping TCSPs compare their AML/CFT practices with industry standards, AML/CTF supervisor guidance, and internationally recognised best practices set up by international organisations like the Financial Action Task Force (FATF) for complying with TCSPs' AML/CFT obligations.
• Government agencies liaison advice: Advising senior management and compliance teams on handling relationships with external bodies, including AML/CTF supervisors and law enforcement agencies, such as the FIU or its local equivalents.
• AML/CFT audit advice: Advising senior management and compliance teams on matters related to the statutory AML/CFT audits, including auditors' guidelines, requirements, AML/CFT audit process, and obligations related to the audit's outcome, tailored to both generic company formation providers’ anti-money laundering compliance obligations and your specific situation.
• AML/CFT remediation advice: We help TCSPs to effectively navigate situations involving an AML/CFT breach, warning, or investigation. The cost of non-compliance can result in significant regulatory fines and penalties, as well as irreparable reputational damage. Therefore, when you are on your supervisor's radar, it’s essential to have AML/CFT advisors who know how to set things right and effectively engage with AML/CFT supervisors and other stakeholders. For more details, please visit our Remediation Solutions page.
• Further information: You can visit our AML advisory page for an extensive list of AML/CFT advisory services we offer to support company formation providers’ anti-money laundering compliance, as well as AML/CFT compliance for other types of financial institutions and businesses subject to the AML/CFT regime.

 

AML/CFT Training and Capacity Building

We offer the following set of AML/CFT training and education solutions tailored to TCSPs’ AML/CFT compliance requirements:

• Customised AML/CFT Training Solutions: Specialised AML training sessions for various teams, including management, compliance, operations, sales, and customer relations, focusing on the TCSPs’ AML requirements, AML/CFT awareness, best practices, and ML/TF red flags.
• Up-to-date Regulatory AML Updates: Keeping your compliance officers, managers, and teams updated with changes in the TCSPs’ AML requirements, AML regulations and guidance.
• Workshops on Emerging Trends and Red Flags: Advising on new AML trends, red flags, and typologies relevant to TCSPs’ money laundering, terrorist financing, fraud, and other types of financial crime.
• Practical Workshops: Interactive workshops for effective and goal-oriented AML/CTF compliance, capacity planning, and resource allocation, covering:

• KYC procedures for TCSPs
• KYB analysis and ML/TF risk assessment application to specific clients, transactions and situations
• The TCSPs’ money laundering risks, common money laundering schemes and terrorist financing methods
• Improvements in clients' onboarding and transaction monitoring procedures
• Reg-tech for AML compliance
• Internal and external AML/CTF reporting
• Related risk and compliance issues, including financial crime prevention
• Application of the risk-based approach to TCSPs’ money laundering, fraud risks, and terrorism financing
• Suspicious matter reporting guidelines
• The implementation of customer identification programs and KYC procedures
• Strategic and operational ML/TF risk management
• AML/CTF specifics of the cross-border client onboarding and company formation
• Other obligations related to the TCSPs’ AML requirements

• Practical Compliance Applications: Ensuring the practical application of training, focusing on real-world TCSPs’ money laundering, terrorist financing, and common TCSP fraud scenarios, as well as specific challenges related to the TCSPs’ AML/CTF compliance that your business is likely to face.
• Further information: You can visit our AML training solutions pagefor an extensive list of AML/CFT training solutions we offer to company formation providers and other businesses subject to AML/CFT regulations.

 

 

Comprehensive AML/CFT Managed Solution for TCSPs

Our TCSPs' AML/CFT compliance management solutions include but are not limited to:

• AML/CFT Compliance Leadership: We act as your dedicated AML/CFT compliance officers (aka “Money Laundering Reporting Officers” or (MLROs optional)) and as compliance managers, fully managing AML/CFT compliance and handling the company formation providers’ anti-money laundering obligations for your business.
• Company formation providers’ anti-money laundering risk management: Conducting detailed assessments to identify ML/TF risks, assess their inherent impact and likelihood of occurrence for your business, evaluate the effectiveness of mitigations and controls in place, and formulate residual risk ratings.
• Managing Client Onboarding process and Customer Due Diligence: Implementing robust Know Your Customer (KYC), Know Your Business (KYB), customer due diligence (CDD), and enhanced due diligence (EDD) processes, for all types of clients, including higher ML/TF risk clients.
• PEP and Sanctions Screening: Managing thorough compliance with AML surveillance requirements by screening against global sanctions and politically exposed persons (PEPs) lists. This covers both initial and ongoing screening, as well as escalation processes for true positives.
• UBO verification streamlining: Verification of beneficial ownership in line with the TCSPs’ AML requirements, identifying and assessing individuals who hold ultimate control over assets. This includes initial and ongoing checks, with procedures to address discrepancies and high-risk cases as they arise.
• AML Transaction Monitoring: Developing and implementing a set of business-specific ML/TF alerts and red flags to detect and report suspicious transactions, helping you comply with the TCSPs’ AML requirements in a commercially efficient manner without making AML/CFT compliance a business hindering factor.
• Transaction Monitoring and TCSP Fraud Prevention Solution: Related to the above, we also help with the implementation of fraud alerts and red flags to detect, prevent, and respond to fraudulent transactions and activities.
• AML/CFT Tech Handling: Leading the alignment of AML/CFT technology implementation with your business processes and AML/CFT objectives. This also includes reviewing AML/CFT technology against the TCSPs’ AML requirements and your core policies and procedures.
• AML/CTF and Data Sharing: Handling information requests from law enforcement agencies, AML/CTF supervisors, and other relevant AML/CTF-designated entities—such as your banking partners, FX platforms, liquidity providers, finance providers, etc.—to help you manage your AML/CTF compliance-related communications.
• Internal AML/CFT Reporting Solutions: Facilitating structured reporting workflows for your board and its delegate committees, with a specific focus on AML/CFT compliance. This includes:
• preparing and presenting comprehensive AML/CFT performance metrics
• providing insights into AML/CFT compliance effectiveness
• reporting on the effectiveness of internal controls and mitigations for your general AML/CFT obligations and the sector-specific TCSPs’ money laundering risks
• identifying areas for improvement

Our AML/CFT compliance reports cover:

• your ongoing compliance status in relation to TCSPs’ AML requirements
• ongoing progress against your organisation-wide AML/CFT compliance calendar
• alignment of your business's AML/CFT performance with specific project goals and relevant KPIs
• other factors to ensure that the management function is well-informed and aligned with AML/CFT compliance requirements for trust and company formation providers.

• TCSPs' AML/CFT Compliance and Externally Reportable Matters: Implementing effective external reporting procedures to help you comply with the company formation providers’ anti-money laundering requirements for reporting captured activities and transactions. This includes managing externally reportable matters covered by the following report types: Suspicious Activity Reports (SARs), Suspicious Matter Reports (SMRs), Suspicious Transaction Reports (STRs), Prescribed Transaction Reports (PTRs), Threshold Transaction Reports (TTRs), and their equivalents.
• Periodic AML/CFT Reporting: Organising and overseeing the preparation, data storage, and effective submission of required periodic reports to your AML/CTF supervisors, helping you comply with the TCSPs' AML requirements for statutory reporting.
• TCSP Fraud Prevention Management: Implementing targeted fraud prevention measures, enhancing internal controls, and helping you comply with internal policies and external regulations. We work to mitigate fraud risks without disrupting business processes, aligning fraud prevention efforts with your broader compliance objectives.

 

 

KYB Solutions for Company Formation Providers’ Anti-Money Laundering Compliance

We offer a range of KYB solutions to help you effectively comply with the TCSPs’ AML requirements. These include:

• Establishing ML/TF risk scoring models and parameters for different risk categories: We establish criteria to assess the ML/TF risk levels of your client base by identifying key risk factors based on their business nature, activities, jurisdictions, and other relevant characteristics and develop a risk scoring model to classify clients into different ML/TF risk categories such as low, medium, and high risk.
• Implementing a Customised KYB Process: We can help you roll out the KYB process across all departments to help your teams become sufficiently trained and equipped to handle clients' ML/TF risk effectively when it comes to verification, monitoring, ongoing due diligence, and other processes.
• KYB Technology and Automation: We select and evaluate technologies that can automate various parts of the KYB process, such as data collection, risk scoring, sanctions screening solutions, and ongoing monitoring.
• KYB-Related Escalation Process: We can develop and implement a clear escalation procedure for handling high-risk clients or irregularities, including the triggers for escalation, the actions required at each step, and the responsibilities for resolving these issues.

 

Core Policies and Procedures for TCSPs’ AML/CFT Compliance

We develop, enhance, and implement a set of core policies, manuals, frameworks, and procedures for effective TCSPs' AML/CFT compliance management, including the following:

• TCSPs' AML/CFT Framework Development: Covering specific TCSPs’ AML requirements and obligations under national AML/CTF laws and regulations, any applicable AML/CFT guidance, your risk appetite, your existing human and technology resources, your business structure, your history of AML/CFT compliance, and your current and future business goals.
• AML/CTF Risk Assessments: Focused on the TCSPs' AML requirements for risk management as they relate to specific ML/TF risks faced by your business in terms of its size, products, client types, jurisdictions of operation, delivery channels, and the financial institutions it interacts with when delivering its services. Also covering the assessment of the effectiveness of existing controls and mitigations in place to determine the residual risk rating for both general ML/TF risks relevant to the most designated service providers/AML/CFT reporting entities and industry-specific ML/TF risks faced by company formation providers as these apply to your business operations. Visit our AML/CTF Risk Assessment page for more information.
• Comprehensive AML/CTF Programs (aka "AML/CFT Programme" in some jurisdictions): When it comes to company formation providers’ anti-money laundering compliance, your AML/CFT program is a core document that details how your business complies with various compulsory AML/CFT obligations, covering:

• the initial and ongoing CDD and EDD processes
• verification methods and requirements for identity, address, and source of funds
• internal and external reporting
• ongoing due diligence
• transaction monitoring
• employee vetting and training
• PEP and sanctions screening, and more

Our TCSPs’ AML solution is about grounding your AML/CTF program in reality and developing it based on your circumstances, including:

• your AML/CFT Risk Assessment
• your available ML/TF systems and controls
• your available resources
• your compliance budget
• your AML/CTF compliance team's experience and size
• your stakeholders' interests
• your available AML technology and other relevant factors
• Further Information: Visit our AML/CTF Programs page for more information.
• TCSPs' AML/CTF Procedures for Effective AML Compliance: Effective procedures are another core pillar of TCSPs’ AML/CTF compliance. This is why our solutions cover the development and enhancement of a detailed set of AML/CTF procedures and protocols to meet the distinct needs of your business, with a focus on effective AML risk management across various business processes and the TCSPs’ AML requirements as they apply to each step of your customer journey.
• AML Manuals and Guidelines: These are more detailed, practical resources that support the procedures by providing step-by-step instructions, specific reference points, and standards. Depending on your business size and complexity, we develop and enhance internal manuals and guidelines necessary for effective and efficient AML/CTF compliance. These include AML Operating Manuals, guiding materials, and guidelines that outline what to do for each process, step, or decision within your procedures.
• ML/TF Controls Mapping: Implementing controls based on your documented risks is another cornerstone of company formation providers’ anti-money laundering compliance. We help you develop, map, and assess your internal ML/TF controls and improve their effectiveness to ensure compliance with TCSPs’ AML requirements, address specific financial crime, money laundering, and terrorist financing trends, and respond to any findings from internal and external AML/CFT auditors and supervisors.
• AML Red Flag Identification and Response Protocols: This is another area where a well-written AML policy or program must face the reality of operational speed, the workload across different teams, available tools, client base size, and other factors. That’s why we focus on developing clear guidelines for identifying and responding to red flags indicative of fraud, money laundering, or terrorist financing activities, enabling you to take timely and appropriate action in different circumstances is another part of our TCSPs’ AML/CFT solution.
• AML/CTF Policy Update: Assisting with the review and enhancement of your core AML/CTF documents and operational procedures to reflect changes in your AML policies, including those caused by:
• updates in the AML/CTF laws, TCSPs’ AML regulations or AML supervisors’ sector guidance
• internal changes in your business structure, size, and resources
• the launch of new products or expansion to new jurisdictions
• changes in your risk appetite
• changes in related obligations, such as privacy laws, information sharing, TCSP fraud prevention requirements, and more
• AML/CFT issues identified during internal or external reviews or audits
• other relevant factors

 

AML/CFT Technology Integration Support

Streamlining AML Compliance: Our TCSP AML solutions include needs assessment and assistance in selecting and integrating appropriate AML technologies for company formation providers’ compliance management. This includes AML compliance technology and tools that cover:

• Customer Due Diligence Automation
• E-KYC and Online Identity Verification
• Customer Onboarding Streamlining
• PEP and Sanctions Screening
• Ultimate Beneficial Owner (UBO) identification,
• KYB Solutions and AML/CFT Risk Management
• AML Alert Management
• Ongoing Due Diligence Obligations Management
• Internal AML/CFT reporting
• TCSP AML/CFT Obligations for External Reporting
• AML/CFT Incident Management
• Exception Escalation and Management
• TCSP Fraud Prevention
• AML/CFT Management Automation: Including automated response workflows and AI technology
• Customisable AML/CFT measures specific to onboarding and monitoring of your high ML/TF risk clients
• TCSP AML/CFT obligations for Record-Keeping
• Transaction Monitoring and Surveillance: Including transaction monitoring tools to automate detection and response to TCSP money laundering and terrorist financing red flags
• Effective CRM for handling TCSPS’ AML Requirements

 

 

TCSPs’ AML/CFT Audit Solutions

Having over ten years of AML/CFT compliance experience, ranging from AML/CFT framework and controls development and testing to successful AML/CFT management and issues resolution for various reporting entities, gives us the necessary expertise and qualifications to be your AML/CFT auditors.

We offer two comprehensive AML/CFT audit options to review your compliance with company formation providers’ anti-money laundering obligations. These options are:

Statutory AML/CTF Audit Option: A comprehensive review of your existing AML/CTF framework to assess whether your business complies with AML/CTF standards and applicable obligations. We independently test your compliance with both local AML/CTF obligations and specific TCSPs’ AML requirements. These often include but are not limited to:

• adherence to your AML/CTF risk assessment and operational AML/CFT procedures, including the existence of controls and mitigations to address money laundering and terrorist financing risks identified in your risk assessment
• compliance with your core AML/CFT documents, including sample testing
• your CDD requirements
• your staff vetting requirements
• your AML/CFT management processes
• your client onboarding and offboarding processes
• your EDD requirements, including source of wealth (SOW) and source of funds (SOF) requirements and application of the risk-based approach to different ML/TF risk levels
• your transaction monitoring process, covering large, complex, and unusual transactions and patterns
• your ODD processes
• your record-keeping process
• your suspicious matter reporting process (also known as "suspicious activity" or "suspicious transaction" reporting in some jurisdictions)
• your other reportable transactions process (typically covering cash and cross-border transactions)
• the way you detect and address material changes in client relationships
• your initial and ongoing screening process
• and other obligations for TCSPs’ AML/CFT compliance

Assurance Levels: Our statutory AML/CFT audit options are available as both:

• A limited assurance audit
• A reasonable assurance audit

Further Information: Please visit our AML/CFT Audit page for more information.

 

Internal AML/CFT Audit Option: Apart from an independent statutory audit, we also offer an internal AML audit option to prepare company formation providers for an external audit by an independent auditor, an AML/CTF supervisor's review, or a review by another significant business stakeholder, such as a banking partner or an equity purchaser. This option is also suitable for significant business events like reorganisation or expansion.

Here, we go beyond merely meeting TCSPs’ AML requirements and focus on evaluating the effectiveness of your AML/CFT controls and ML/TF risk management processes for alignment with:

• the ML/TF risks faced by your business, including your Know Your Business (KYB) analysis
• company formation providers’ anti-money laundering compliance obligations
• your current and future goals
• your business model
• your current and prospective client inflow
• the specific AML/CFT compliance areas or requirements (this process can be tailored to address particular AML issues or compliance areas, ensuring a targeted approach to company formation providers’ anti-money laundering compliance)

We help you not only identify any gaps and weaknesses but also provide insights on how to enhance your controls and respond to these in a commercially oriented manner for smarter AML/CFT compliance. Please visit our Internal AML/CFT Review Solution page for more information.

 

AML/CFT audit-related solutions:

• Post-Audit Remediation Support: We assist with the implementation of post-audit remediation actions, addressing and resolving any identified AML/CFT issues.
• AML/CFT Attestation Support: Our TCSPs’ AML solutions include helping you prepare the required attestations for your AML/CFT supervisor and other stakeholders. This involves confirming that all necessary remedial actions have been completed and that adequate AML/CFT compliance measures have been put in place.
• Post-Audit Stakeholders' Liaison: We manage your communications with national AML/CTF supervisors, banks, auditors, insurers, and other stakeholders, ensuring smooth progress in reporting on the status and completion of your post-audit action plan.

 

TCSP Fraud Prevention Solutions

The company formation providers’ anti-money laundering control environment is closely related to prevention of financial crime in general, and fraud prevention in particular. TCSP fraud prevention controls and ML/TF controls can form a unified compliance management framework tailored to the specific ML/TF and fraud risks your business is facing or is likely to face.

Our TCSP Fraud Prevention Solutions include:

• Fraud Risk Assessment and Analysis: Conducting assessments to identify and prioritise fraud risks across your operations, allowing you to allocate resources effectively.
• Incident Response and Investigation: Creating response plans to manage fraud incidents, including guidelines for investigating, documenting, and applying corrective actions to minimise potential damage.
• Implementing Preventive Measures: Setting up checks, alerts, and controls to tackle fraud risks in the company formation sector, as well as drafting a set of procedures and guidelines to address fraud scenarios that you are likely to face or have faced.
• Data Analytics for Fraud Detection: Leveraging data analytics to identify focus points for your fraud prevention efforts and areas for improvement.
• Fraud Detection Technology Implementation: Choosing and helping you implement appropriate technology for real-time fraud detection.
• Fraud Awareness Training: Educating staff about fraud risks, including identity theft and impersonation.
• Further information: Please visit our Fraud Management Solutions page for more information.

 

TCSP Fraud Response Requirements: In the current risk and compliance environment, implementing fraud prevention measures is either already mandated by law in some jurisdictions or, at minimum, expected by government agencies, financial market participants, and other stakeholders.

 

Broader Risk & Compliance Solutions for TCSPs

Your AML/CFT compliance is generally more effective when the right hand knows what the left hand is doing, and at the very least, they do not interfere with each other. Incorporating your controls and procedures for compliance with the TCSPs’ AML requirements into an overall risk and compliance management framework efficiently can increase your overall risk compliance effectiveness. This is where our experience can help you. Apart from AML/CFT compliance solutions for company formation providers, we include the following risk and compliance solutions:

• Compliance Advisory and Management: A comprehensive set of solutions for second-line compliance management, including both compliance advisory and compliance management options
• Third-line Compliance Assurance: A range of third-line compliance defence solutions covering compliance assurance program development and implementation, internal controls design, and controls testing solutions
• ISO Standards Compliance: A range of solutions for compliance with the International Organization for Standardization (ISO) standards, helping you prepare for ISO certification
• FATCA and CRS Compliance: A comprehensive set of solutions for complying with the Foreign Account Tax Compliance Act (FATCA) and the Common Reporting Standard (CRS) requirements, including tax residency verification, ongoing due diligence, reporting, and record-keeping
• Privacy Law Compliance: A range of solutions covering development, implementation, and testing of data privacy controls, procedures, and tools required to meet the applicable obligations under the Privacy Act, the GDPR, ISO 27701, etc.
• Financial Licensing and Registration: A set of financial licensing solutions for company formation providers, including preparation, licensing process management, regulator liaison, and post-licensing support in:

• Australia
• Singapore
• Offshore financial centres and tax havens
• The United Kingdom
• The United States
• New Zealand

 

 

Common Money Laundering Risks for TCSPs

TCSPs’ money laundering risk types can be broadly classified into five categories:

• Product types (services offered)
• Delivery methods
• Customer types
• The institutions involved in delivering your services
• Jurisdictions of operation

Given the variety of products offered by different businesses, as well as their different business structures and operations, the examples below of money laundering risks faced by company formation proivders represent only a sample and are not exhaustive or tailored to specific business providers.

 

Product-Related Risks and Company Formation AML Compliance

Some of the product-related ML/TF risks relevant to company formation providers’ anti-money laundering compliance include:

• Use of Nominee Directors and Shareholders Without Verification: Offering nominee services without sufficient due diligence increases the risk of concealing beneficial ownership, enabling criminals to obscure the true controllers of entities.
• Confidential Ownership Agreements Concealing Control: Private ownership agreements or undisclosed operational control arrangements not appearing on company records allow customers to retain control while evading regulatory scrutiny.
• Complex Trust and Corporate Structures: Trusts and entities with layered or multi-jurisdictional structures make tracing beneficial ownership challenging, facilitating fund concealment for money laundering or terrorist financing.
• Unverified Asset Transfers and Ownership Changes: Inadequate verification and monitoring of asset transfers, such as property ownership changes, expose platforms to misuse for laundering illicit funds through legitimate-looking transactions.
• Facilitation of Offshore Bank Accounts Without Oversight: Using offshore financial intermediaries to establish bank accounts for clients without monitoring their activity increases the risk of laundering funds through poorly regulated jurisdictions.
• False Invoicing or Fraudulent Loss Reporting: Allowing entities to issue false invoices or report fictitious investment losses, often without proper transaction monitoring, legitimises illicit funds and complicates AML efforts.
• Virtual Office Services Misuse: Providing registered offices, mail forwarding, or phone services without verifying the legitimacy of clients’ operations enables criminals to create a façade of legitimacy while concealing illicit activities.
• Offshore Company Formation in Tax Havens: Absence of Additional AML/CFT Controls
  Facilitating the establishment of entities in offshore tax havens without applying effective AML/CFT controls increases exposure to risks of tax evasion, financial crime, and misuse for illicit purposes.
• Provision of Proxy Roles Without Risk Assessment: Acting as or arranging nominee directors, trustees, or shareholders without evaluating their purpose and legitimacy facilitates laundering through obscured company control.
• Use of Entities for Layering Funds: Allowing clients to create multiple interrelated companies without scrutinising the rationale increases the risk of layering and disguising illicit fund flows.
• Trust Misuse for Laundering: Trusts, particularly those with multiple entities and beneficiaries, can conceal the origins of funds, necessitating effective due diligence to identify and address misuse.
• Unregulated Financial Intermediaries: Engaging with unregulated third-party agents or intermediaries without ensuring their compliance with AML/CFT standards risks enabling illicit transactions.
• Inadequate Risk Assessment for Cross-Border Activities: Forming entities designed to operate in high-risk jurisdictions without assessing the regulatory risks creates opportunities for exploitation by criminals.
• Lack of Scrutiny for High-Risk Business Models: Forming companies or trusts in sectors with higher ML/TF vulnerabilities (e.g., virtual assets, high-value commodities) without enhanced due diligence increases exposure to financial crime.

 

Jurisdictional Risks and Company Formation AML Compliance

Some of the jurisdictional ML/TF risks relevant to TCSPs’ money laundering prevention include:

• Lack of Controls for Formation of Companies in High-Risk Jurisdictions: Absence of robust mechanisms to identify and mitigate risks when facilitating entity formation in jurisdictions with weak AML/CFT measures, high levels of corruption, or poor regulatory oversight increases exposure to laundering illicit funds.
• Weak Oversight of Offshore Jurisdictions Used to Evade AML/CFT Measures: Insufficient controls to detect misuse of tax havens or offshore financial centres where beneficial ownership requirements are limited creates opportunities for fund layering and anonymity.
• Absence of Risk Mitigation for Cross-Border Entity Formation in Conflict Zones or Sanctioned Regions: Lack of effective screening processes when forming entities in or near conflict zones, sanctioned jurisdictions, or high-risk geopolitical areas facilitates misuse for terrorism financing and other illicit activities.

 

Delivery Method Risks and Company Formation AML Compliance

Some of the delivery method-related ML/TF risks relevant to company formation providers’ anti-money laundering compliance include:

• Inadequate eKYC Processes: Weak electronic Know Your Customer (eKYC) measures during onboarding increase exposure to onboarding fraudulent or high-risk clients, particularly in non-face-to-face applications.
• Failure to Link Submitted Documents to Verified Identities: Insufficient mechanisms to cross-check identification documents provided by clients with verified data sources lead to risks of accepting forged or stolen identities.
• Insufficient Controls for Non-Face-to-Face Transactions: Lack of enhanced due diligence for clients onboarded remotely or through online channels increases the risk of onboarding clients with criminal intent or concealing beneficial ownership.

 

Customer Type Risks and Company Formation AML Compliance

Some of the customer type-related ML/TF risks relevant to TCSPs’ money laundering prevention include:

• Inadequate AML/CFT Controls for Intermediaries Establishing Entities: Failure to implement effective measures to verify and monitor intermediaries, such as law firms or accountants, who facilitate the creation of companies or trusts on behalf of clients.
• Failure to Mitigate Risks from Clients in High-Risk Jurisdictions: Insufficient mechanisms to identify and address risks associated with clients based in, or controlled by entities in, jurisdictions known for weak AML/CFT frameworks, corruption, or organised crime. Particularly when they want to set up business structures in offshore tax havens or lower-risk jurisdictions with no visible commercial purpose.
• Lack of Screening for High-Risk Occupations or Industries: Inadequate due diligence for clients operating in industries that require licensing or AML/CFT registration, particularly when establishing offshore entities to evade financial licensing and AML/CFT obligations.
• Weak Controls for Clients Acting on Behalf of Third Parties: Absence of verification measures to identify whether clients are forming entities on behalf of undisclosed third parties, creating opportunities for concealment of illicit activities.

 

Institutional Risks and Company Formation AML Compliance

Some of the institutional ML/TF risks relevant to TCSPs' anti-money laundering compliance include:

• Limited Controls on Use of Nominee Directors or Shareholders: Lack of mechanisms to verify the legitimacy of nominee directors or shareholders introduced by external institutions obscures beneficial ownership and facilitates ML/TF activities.
• Overreliance on Third-Party AML Agents Without Oversight: Lack of due diligence on outsourced AML agents or intermediaries may result in reliance on agents that do not meet required AML/CFT standards, exposing the firm to compliance gaps.

 

Standard Anti-Money Laundering Requirements for TCSPs

Given the variety of TCSPS anti-money laundering requirements, this list is not exhaustive:

• Conducting customer due diligence, including appropriate KYC checks: Ensuring verification of customers’ identities, as well as identities of beneficial owners of customers that are legal entities.
• Conducting transaction monitoring: To identify and report suspicious transactions and patterns. However, for TCSPs this obligation is often limited to monitoring payments received from clients for their formation services.
• ODD requirements: Conducting ongoing customer due diligence, which is generally based on the customers' ML/TF risk profiles and ML/TF risk categories, as well as changes in their activities, behaviours, or risk factors.
• Staff Vetting: Performing comprehensive background checks and ongoing vetting of staff to maintain high standards of integrity and awareness.
• Reporting Certain Non-Suspicious Transactions: Obligation to report cross-border or cash transactions over a certain threshold, as per the local AML/CFT regulations, in a timely manner. However, if the transaction is processed through a local bank or another reporting entity, reporting requirements may depend on the local AML/CFT regulatory interpretation.
• Compliance with the regulatory obligations: Including registering with your local AML/CTF supervisor, appointing an AML/CTF officer or an MLRO, answering requests for information from the police, regulators and your AML/CTF supervisor, filing an annual report and more.
• Regular Staff Training: Providing continuous training to ensure employees are aware of AML/CFT protocols and can recognise red flags.
• Timely Reporting of Suspicious Transactions: Ensuring that suspicious transactions and activities are reported to the relevant authority (either your local AML/CFT supervisor or a financial intelligence unit (FIU)) within the required deadlines.
• ML/TF Risk Assessments: Conducting regular assessments of ML/TF risks faced by your business is a part of AML risk management for company formation providers.
• Independent AML/CFT audits and TCSPs: Organising periodic independent reviews of the AML/CFT program, other core documents, and components of your AML/CFT framework to assess their existence, compliance, application, and, where applicable, effectiveness, depending on local AML/CFT audit guidance.
• Applying EDD measures: Conducting enhanced due diligence on certain customers and certain transaction types.
• Establishing Clear AML/CFT Policies and Procedures: Creating documented guidelines for staff to follow.
• Monitoring PEPs and Sanctioned Entities: Implementing measures for additional scrutiny of politically exposed persons and entities on sanction lists.
• Screening Against Watchlists: Regular checks of clients against domestic and international watchlists.
• Ensuring Proper Record-Keeping: Maintaining detailed and accurate records of client information and transactions in compliance with AML/CFT regulations.

 

Common TCSPs’ AML/CFT Issues

This is not an exhaustive list:

During Customer Onboarding

• Inadequate Identity Verification: Failure to thoroughly verify customer identity, increasing the risk of identity fraud.
• Insufficient Risk Profile Assessment: Inability to accurately assess a customer's risk profile, including inadequate analysis of the source of funds.
• Over-reliance on Outdated Information: Relying on outdated or insufficient documentation, leading to non-compliance with KYC norms.

 

After Customer Onboarding

• Ineffective Transaction Monitoring: Inadequate monitoring of transactions, leading to missed detection of suspicious activities.
• Outdated Customer Information: Failure to regularly update customer information and risk profiles, resulting in obsolete risk assessments.
• Non-Detection of Behavioural Changes: Lack of detection mechanisms for changes in customer behaviour or transaction patterns that may indicate money laundering or terrorist financing

 

 

 

 

 

Common TCSP Fraud Risks

The following list of TCSP fraud types is not exhaustive:

• TCSP and Identity Fraud: Using stolen or falsified identities to establish companies, trusts, or bank accounts, enabling unauthorised access to financial services.
• TCSP and Document Fraud: Fabrication or manipulation of documentation to establish entities, open accounts, or facilitate fraudulent activities, including falsified incorporation papers or financial statements.
• TCSP and Offshore Entity Fraud: Establishing offshore companies or trusts to evade taxes, bypass licensing requirements, or obscure beneficial ownership, increasing exposure to money laundering and other illicit activities.
• TCSP and Proxy Fraud: Using nominee directors or shareholders to conceal true beneficial ownership, creating barriers to regulatory and law enforcement transparency.
• TCSP and Complex Structure Fraud: Facilitating the creation of intricate corporate structures that layer ownership or operational control, enabling the laundering of illicit funds or hiding assets.
• TCSP and Kickback Fraud: Engaging in bribery or kickbacks to secure the establishment or management of entities for criminal purposes, often linked to offshore jurisdictions.
• TCSP and Trust Fraud: Misuse of trust arrangements to obscure asset ownership or facilitate fraudulent transfers, often involving multiple layers of entities.
• TCSP and Beneficial Ownership Concealment: Assisting clients in hiding beneficial ownership through opaque structures, trusts, or offshore services to facilitate illicit activities or evade regulations.
• TCSP and Tax Evasion Fraud: Developing structures or services specifically designed to enable clients to illegally evade taxes through offshore arrangements or misrepresentation.
• TCSP and Corruption-Linked Fraud: Assisting in the transfer or concealment of funds linked to bribery, embezzlement, or other forms of corruption, particularly in high-risk jurisdictions.
• TCSP and Money Laundering Through Complex Structures: Designing corporate formations that facilitate the movement of illicit funds through layered transactions, exploiting weak AML/CFT oversight in specific jurisdictions.

 

 

Common AML/CTF Red Flags for TCSPS

The Financial Action Task Force (FATF) and various national AML/CTF supervisors outline the following ML/TF red flags for TCSPS. This is not an exhaustive list:

• Complex Ownership or Control Structures: Difficulty in identifying beneficial ownership due to unnecessarily complex structures, which obscure the true owners or controllers of an entity.
• Inconsistent Use of Trusts and Companies: Utilisation of trusts and companies in manners inconsistent with their typical purposes, raising concerns about their legitimacy.
• Rapid Succession of Legal Entities: Frequent creation or dissolution of entities within a short timeframe, suggesting attempts to obscure ownership or evade regulatory scrutiny.
• Unnecessary Structural Complexity: Engagement in overly intricate ownership, financial, or operational arrangements without clear legal, economic, or business justifications. (Merged "Complex Financial Arrangements" and "Unusual Business Structures.")
• Links to High-Risk Sectors or Individuals: Associations with sectors or individuals known for elevated ML/TF risks, such as politically exposed persons (PEPs) or industries prone to corruption.
• Third-Party Involvement Without Clear Explanation: Unrelated third parties involved in the establishment or management of trusts and companies, without a transparent or legitimate purpose.
• Frequent Structural Changes: Regular and unexplained changes to an entity’s structure or control, suggesting efforts to evade scrutiny or obscure ownership.
• Discrepancies in Information: Inconsistencies, gaps, or falsifications in client information, transaction records, or declared purposes.